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Drug Patent Expirations Continue To Hit Pfizer Revenue

By ZenobiaSky, Feb 2, 2014 | |
  1. ZenobiaSky
    Generic versions of name-brand medicines might help consumers keep money in their wallets, but consumers’ gains are proving to be nothing but pain for companies like Pfizer whose revenues have continued to get hit by the expiration of patents for some of its most valuable brands.

    The global drug maker reported $13.6 billion in fourth quarter revenue on Tuesday, a figure that beat Street expectations but marks a 2% decline over the $13.9 billion it reported for the same quarter in 2012. Pfizer’s profit, however, increased 9% to $3.7 billion, resulting in earnings of 56 cents per share, beating the analyst consensus by three cents. The pharmaceutical giant attributed the drop in revenue to the patent expiration for Enbrel, an arthritis medication, in North America, continued effects from Lipitor’s patent expiration in Europe and other developed markets, and the loss of exclusive rights to bronchitis medicine Spiriva in a number of countries.

    On a full-year basis, Pfizer revenue decreased 6% to $51.6 billion, and full year adjusted income decreased 6% to $15.3 billion, resulting in earnings of $2.22 per share. Again, Pfizer partially attributed the drop to the erosion of branded Lipitor in the U.S., though the company noted that the growth of drugs like Lyrica, Celebrex and Inlyta helped its full-year results, as did its separation of its animal health business (which is now its own publicly traded company, called Zoetis.

    “We achieved or exceeded all elements of our 2013 financial guidance despite an operating environment that remains challenging,” Pfizer CFO Frank D’Amelio said in a statement Tuesday, adding that the disposition of Zoetis and the formation of a new commercial structure were two important goals the company was able to accomplish in 2013. ”With our strong operating cash flow as well as the proceeds generated from the separations of our Nutrition and Animal Health businesses, we repurchased $16.3 billion of our common stock in 2013.”

    Looking ahead to 2014, chairman and CEO Ian Read said that Pfizer’s focus will be on advancing science and technologies to deliver new medicine and therapies in areas with unmet need. “During 2014, we expect to report on several, important clinical data readouts for our mid- and late-stage pipeline compounds,” he said in a statement on Tuesday, adding that in the near term, he expects Pfizer will report results from trials on breast cancer treatments, cholesterol medicine and psoriasis treatments.

    Pfizer said it expects to see 2014 adjusted revenue in the $49.2 billion to $51.2 billion range, with full-year adjusted earnings coming in somewhere between $2.20 and $2.30 per share. This guidance reflects the anticipation of a $3 billion hit from current and future drug patent expirations and the loss of product exclusivity, as well as the expiration of some collaboration agreements. D’Amelio added that Pfizer expects its 2014 share repurchases to reach $5 billion.

    Following the release of the mixed results, Pfizer shares opened at $30.44, a slight increase over Monday’s closing price of $29.66. The stock, which finished 2013 with an 18% return, is currently trading for a 3.3% gain. Shares of Zoetis, the animal health products spinoff, was relatively unaffected by the news: shares of the pet and livestock-focused business opened just three cents higher than its Monday closing price of $31.29 and are currently up just 0.5%. Zoetis saw more modest growth than its former parent, finishing 2013 trading with just a 5.4% return.

    Maggie McGrath,
    Forbes Staff


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